Hindenburg Research Targets Super Micro Computer with Scathing Report

Hindenburg Research released a comprehensive report accusing Super Micro Computer of financial misconduct and related-party transactions. The allegations raised investor concerns, potentially impacting the company's stock and reputation. The report comes after extensive investigation, including interviews and document reviews, with Super Micro's stock showing notable declines following the claims.

Hindenburg Research, a US-based short seller, released a detailed report on Tuesday alleging serious financial misconduct at Silicon Valley company Super Micro Computer. The report claimed evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.

The three-month investigation included interviews with former senior employees and industry experts, as well as a thorough review of litigation and international corporate records. Hindenburg's report, which sparked concerns among investors, indicated that Super Micro's stock price and reputation might take a hit.

Super Micro, valued at USD 35 billion, is a leading server maker benefiting from the AI boom. Despite its recent success, the company has a history of financial issues, including a temporary delisting from Nasdaq in 2018 and SEC charges in 2020 for widespread accounting violations. Following these allegations, Super Micro's shares dropped by 2.64%.

Hindenburg revealed a short position in Super Micro's stock, meaning it profits from the stock's decline. Despite the company's stock rising 93% this year, it has seen a 36% pullback over the past six months.

The report also accused Super Micro of restarting improper revenue recognition practices just months after a USD 17.5 million SEC settlement. Hindenburg's investigation suggests that pressure to meet quotas led to dubious accounting and distribution practices.

Moreover, Hindenburg highlighted competition and quality concerns that have resulted in major companies dropping or reducing their business with Super Micro. The company has yet to respond to these allegations, and its future actions will be closely watched by stakeholders.

Hindenburg, which frequently takes positions in the securities it reports on, further stated that it might change its stance on these securities at any time. Investors await a response from Super Micro to address these serious claims.

(With inputs from agencies.)